Audited results for the year ended 30 June 2005

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Audited results for the year ended 30 June 2005
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Agenda

• Key messages
• Group reporting
• Financial highlights
• Financial review
• Business review
• BEE ownership transaction

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Key messages
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Key messages

• Focus on triple bottom line reporting
• Fifth year of consecutive earnings growth
• Announcement of proposed BEE ownership
  transaction

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Group reporting
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Group reporting

• In line with current international trends, Group
  Five has aimed to provide fuller communication
  and a greater depth of reporting

• 2005 annual report has been significantly
  improved to encapsulate the three traditional
  spheres of sustainability namely

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Financial highlights
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Financial highlights
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Financial review

• Key performance indicators
• Segmental analysis
• Liquidity and cash resources
• IFRS update

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Financial review - Key performance indicators
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Earnings and dividends per share
49.0
44.0
190.1
37.0
170.7
31.0
144.8
115.8
25.0
70.9
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Key financial ratios at Group Five
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Super-ordinate goals
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Super-ordinate goals
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Financial review - Segmental analysis
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Segmental analysis
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Operating margins
12 to 18 month target
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Total revenue geographical segments
4 939
4 252
4 100
MILLIONS
3 420
2 736
2 742
1 519
1 516
1 358
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Financial review Liquidity cash resources
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Cash flow (R million)
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Financial review IFRS update
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New accounting standards

• The IASB has been revising accounting standards
  since December 2003 known as IFRS

• To date 13 current standards were amended and 5
  new standards issued

• SAICA has agreed to accept IFRS without
  amendment effective years beginning on or after
  1 January 2005

• Group Five will adopt with effect from 1 July 2005

• Other than disclosure/presentation changes, most
  significant effects will be in two areas

• - Foreign exchange accounting
• - Property, plant and equipment
• - Accounting for BEE ownership transaction

• Accounting for share options has a minimal
  effect on Group Five

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Business review
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Property Development Services

Revenue
Operating Profit
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Property Development Services

• Performance
• Focus towards specific core commercial,
  industrial retail and residential projects
• Application of formalised risk approach to all
  projects throughout project lifecycle
• Over 50 projects currently being reviewed

• Focus and challenges for the year ahead
• Moving from reactive to proactive approach by
  aggressively pursuing opportunities through
  extensive market research
• Expanding in South Africa beyond Gauteng
• Implementing formalised customer relationship
  management programme
• Identifying and evaluating additional longer term
  property investment annuity income opportunities

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Manufacturing
Revenue
Operating Profit
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Manufacturing

• Performance Everite Building Products
• Performance pleasing given the threat of imports
• Factory regularly operated at full capacity
• Focused development of value added products
• Volume growth of 13 and growth price of 7 with
  strong performance in Cape, KwaZulu Natal and
  Eastern Cape regions

• Performance Vaal Sanitaryware
• Performed well in tough trading conditions.
  Overall profit margin decreased due to import and
  competitor strength
• Yield/recovery problems experienced during first
  quarter of 2005 calendar year due to delayed
  commissioning of robotic technology
• Problems rectified and yield percentages
  currently approaching benchmarked levels

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Manufacturing

• Performance DPI Plastics (40 owned by Group
  Five)
• Tough year due to significant decline in civils
  projects in South Africa
• Revenue and margins also affected by explosion at
  Sasols Secunda plant from Nov 04 to Jan 05,
  (subsequent higher cost of raw materials)
• Production problems in South African factories
  due to labour unrest
• Currently receiving hands-on executive focus

• Performance Group Five Pipe
• Group Five Pipe South Africa, in which the group
  has a 50 interest, recommissioned its Meyerton
  factory to supply spiral weld steel pipes
• Achieved small operating profit

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Manufacturing

• Focus and challenges for the year ahead
• Employ import and technology strategies to
  increase sales volume capacity to satisfy market
  demand within Everite Building Products
• Develop new value added products in Everite
  Building Products
• Invest in further technology to improve factory
  yields in Vaal Sanitaryware and expand product
  range
• Reinvigorate and formalise a customer
  relationship management programme within Vaal
  Sanitaryware
• Improve factory efficiency and productivity at
  DPI Plastics
• Implement tighter control measures in the joint
  venture operations within DPI Plastics

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Construction
Revenue
Operating Profit
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Construction

• Performance Buildings/Housing
• Revenue increased by 18
• Profit margin decreased following the completion
  of an exceptional Angola housing project in the
  prior year as cautioned at the interim stage
• The strengthening of the Rand affected the
  overall margins achieved due to less contribution
  from higher margin over-border contracts

• Performance Civil Engineering
• Overall operating loss was incurred in local and
  African operations due to a significant downturn
  in government infrastructural spend and local
  mining spend resulting in overhead
  under-recoveries
• Two local business units merged as a result
• Office set up in Dubai and over R1 billion order
  book secured

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Construction

• Performance Roads and Earthworks
• Turnaround successfully completed
• Break-even achieved at the operating profit line
  compared to operating loss in the prior year
  despite competitive market conditions

• Performance Engineering Projects
• Engineering projects had an outstanding year
• Focus on over-border mining opportunities
  together with projects in the heavy industrial,
  power, oil and gas sectors has proved successful
  and will be continued

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Construction

• Focus and challenges for the year ahead
• Building/Housing focus
• Recruiting and retaining skilled people
• Improving profit margins in Buildings/Housing
  through
• Efficient mobilisation and contract completion
• Selective tendering and pursuing over-border work
• Civil Engineering focus
• Ensure work is delivered in Dubai on time and
  profitably (new market)
• Identify and secure higher margin work where
  higher level of technical skills are required
• Roads focus
• Securing additional profitable work in Southern
  Africa but limiting order book to approximately
  R440 million
• Formalising a focused customer relationship
  management programme to assist in securing
  additional work
• Engineering Projects focus
• Pursue additional partnering/alliancing
  relationships with key customers
• Pursue EPC solutions strategy

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Construction operating regions
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Construction order book
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Construction order book cont
Civil Engineering
Engineering Projects
Building
Roads
Total
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Operations and Maintenance
Revenue
Operating Profit
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Operations and maintenance

• Performance Operations and maintenance
• Intertolls operating profit was adversely
  affected by the ongoing contractual dispute on
  three Indian operations and maintenance toll road
  contracts resolution thereon is expected by
  late 2005

• Performance Infrastructural developments
• Polish concession agreement signed
• A total fair value adjustment of R35,7 million
  (2004 R48,5 million) arose in the current year
  relating to the investment in the Polish (R3,2
  million) and Hungarian (R32,5million) toll road
  concessions

• Performance WSSA
• Had a good year, improving operating profit

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Operations and maintenance

• Focus and challenges ahead
• Focused attention with partners and client with
  regards to resolution of operations and
  maintenance contractual dispute
• Concentration and restructuring around the two
  core geographic areas of South Africa and Europe
  working in the PPP environment

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BEE ownership transaction
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Group Five BEE ownership process and structure

• Embarked on BEE ownership process in May 2004
• Identified more than 20 consortiums from which
  detailed information was requested
• Four partners selected for presentations
• Two selected to form a consortium, namely iLima
  and Mvelaphanda
• In addition, staff allocated an ownership
  percentage

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Group Five BEE ownership process and structure

• Fundamental selection criteria for partners were
• Construction/infrastructural development must be
  a part of their core focus
• Preferably proven business persons with
  networking ability
• Organisations must be stable, have a good track
  record and good future potential
• Ability to add value must be present
• Chemistry must be compatible with Group Five
• Must have goal to transform the whole of Group
  Five
• Must be South African

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Structure and mechanisms
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Key features

• Economic and voting rights secured upfront
• Fulfills ownership criteria of Codes of Best
  Practice and draft Construction Charter
• Economic cost to shareholders of approximately
  5.5, ie a cost of approximately R70 million
  incurred primarily once-off
• Created through fresh issue of shares therefore
  no potential Capital Gains Tax issues for current
  shareholders
• Circular to be released in week of 22 August 2005
• Shareholder voting on 29 September 2005

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Questions